1)Can China manipulate world politics through its strong economic policies?

2)What specific economic policies have been the most effective in promoting growth in a country?

3)What is the most efficient way to obtain a comprehensive understanding of fiscal policy, monetary policy and financial markets?

1)Yes, China can manipulate world politics through its strong economic policies. China holds a significant position in the world market or global economy for its exports. If the economic policies of China regulate its imports and exports, thereby reducing the trade of China with the rest of the world, it will affect the politics of the whole world. For example, the trade war between the US and China has changed the trading pattern all over the world. Due to the imposition of tariffs on the Chinese products, the imports have become expensive for nearly all the countries and around fifty countries have switched to other nations for their imports.

2)The main types of economic policies contributing to economic growth include

• Fiscal policies. The government uses fiscal policies to boost economic activities. It entails the use of tax cuts and increased expenditure by the government expenditure purposed to augment the amount of money in circulation in the economy hence accelerating aggregate demand leading to augmented productivity and creation of employment. The government also contracts the economy by reducing the supply of money through reduced government expenditure and tax increase to reduce inflation and its negative effects on the economy.
• Monetary policies. The policies regulate the supply of money by controlling the cost of borrowing. Tight monetary policies help in reducing credit availability in a country hence maintaining inflation at the lowest possible limits. On the other hand, expanding the supply of money entails lowering the interest rate hence making loans cheaper. Consequently, increased supply of money stimulates economic growth as it encourages investments as well as consumption resulting in improved gross domestic product.

3)Fiscal policy: It can be understood as the policy through which the government influences the economy of a country by bringing changes in the spending rates and taxes.

When the government increases the level of spendings aggregate demand in the country also rises which can increase the rate of growth in the short run. Increased government spendings increase the welfare of the country as it will tent to reduce the inequality, it improves the infrastructure of the country, it will increase the cost of borrowings and will provide better education facilities to people which will increase the productivity of individuals.

When there is a reduction in the tax rates, there is an increase in the disposable income of people. This will lead to an increase in demand and production in the economy. Increase in taxes will have the opposite effect. This is how the fiscal policies of government work.

Monetary policies: This policy can be understood as the policy of monetary authority of the country in which the objective is to directly control the money supply to impact the level of employment, output, and price. It can be classified as an expansionary policy and deflationary policy. The monetary authority controls the money supply by using various tools such as open market operation, reserve requirements, and discount rates. Consider a situation when there is an increase in reserve requirements. The increase in reserve requirements will reduce the money supply in the economy.

Financial Market: It is a market where the exchange of securities such as shares, bonds, debentures anmd currencies takes place. Both new and old securities are traded in the financial markets. The transaction cost of the securities traded in the financial market is very low.